First Big Test For Last Week's Rally

Bonds surged lower in yield last week on a combination of economic data, Fed comments, and the Treasury issuance update.  While the move definitely drew some strength from the deeply oversold bigger-picture momentum, it was nonetheless more than merely a token correction.  But is it "much more?"  We can't really answer that question for a few more weeks, but we can begin to answer it by seeing how this week's Treasury auctions are digested.  Tuesday's 3yr auction went well, but today's 10yr auction is much more consequential.

Needless to say, if 10s were willing to react that much to the 3yr auction, a similarly strong auction result today would easily break the stalemate at 4.55%.  Conversely, a weak result would would add more emphasis to the "floor" vibes.